Calculate the lien amount a subcontractor can claim in Louisiana. Subcontract amount: $45,000. Work completed: 80%. Payments received: $25,000. What is the maximum lien claim?
Correct Answer
A) $11,000
Work completed: $45,000 × 80% = $36,000. Amount due: $36,000 - $25,000 = $11,000. The lien can only be for the amount actually due.
Why This Is the Correct Answer
Option A is correct. The maximum lien is based on the amount actually earned but unpaid. Step 1: Calculate value of work completed: $45,000 × 80% = $36,000. Step 2: Subtract payments already received: $36,000 − $25,000 = $11,000. The lien can only be for money legitimately owed — you cannot lien for work not yet performed or for money already paid.
Why the Other Options Are Wrong
Option B: $20,000
Incorrect. $20,000 represents the difference between the full subcontract amount and payments received ($45,000 − $25,000 = $20,000), ignoring the fact that only 80% of the work was completed. A lien can only be claimed for work actually performed and unpaid, not for the entire contract balance.
Option C: $45,000
Incorrect. $45,000 is the full subcontract amount, but the subcontractor only completed 80% of the work. Claiming a lien for the full contract amount when work is incomplete would be overstating the claim. A lien is limited to the value of work actually furnished.
Option D: $36,000
Incorrect. $36,000 is the value of work completed (80% × $45,000) but fails to account for the $25,000 already paid. Ignoring payments already received would result in double recovery. The lien amount must be reduced by any payments already made.
Memory Technique
Lien = Earned − Paid. Step 1: Earned = Contract × % Complete = $45,000 × 80% = $36,000. Step 2: Lien = Earned − Paid = $36,000 − $25,000 = $11,000. Think of it as: 'What did I earn? What did I get? The difference is what I'm owed.'
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